HARINDERJIT SINGH vs DISCIPLINARY COMMITTEE BENCH III THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA & ANR.
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 22nd March, 2024
Date of Pronouncement: 3rd July, 2024
+ W.P.(C) 11944/2021 & CM APPL. 12020/2024
HARINDERJIT SINGH ….. Petitioner
Through: Mr. Sudhir Makkar, Mr. Saurabh Kripal, Sr. Advs. with Mr. Allwyn Noronha, Mr. Kamal Shankar, Mr. Gautam Verma, Mr. Atul N & Mr. Arjun Narang, Advs. (M: 8800763112)
versus
DISCIPLINARY COMMITTEE BENCH III
THE INSTITUTE OF CHARTERED ACCOUNTANTS
OF INDIA & ANR. ….. Respondents
Through: Mr. Ramji Srinivasan Sr. Adv. with Ms. Pooja M. Saigal, Mr. Nikhil Sabri, Mr. Nipun Gupta & Ms. Namrata, Advs. (M: 9810137113)
WITH
+ W.P.(C) 13375/2021 & CM APPL. 42141/2021, 12017/2024
MR ABHISHEK RARA ….. Petitioner
Through: Mr. Sudhir Makkar, Mr. Saurabh Kripal, Sr. Advs. with Mr. Allwyn Noronha, Mr. Kamal Shankar, Mr. Gautam Verma, Mr. Atul N & Mr. Arjun Narang, Advs.
versus
DISCIPLINARY COMMITTEE BENCH III
THE INSTITUTE OF CHARTERED ACCOUNTANTS
OF INDIA & ANR. ….. Respondents
Through: Mr. Ramji Srinivasan Sr. Adv. with Ms. Pooja M. Saigal, Mr. Nikhil Sabri, Mr. Nipun Gupta & Ms. Namrata, Advs. (M: 9810137113)
WITH
+ W.P.(C) 13376/2021 & CM APPL. 42143/2021, 12021/2024
USHA RAJEEV ….. Petitioner
Through: Mr. Sudhir Makkar, Mr. Saurabh Kripal, Sr. Advs. with Mr. Allwyn Noronha, Mr. Kamal Shankar, Mr. Gautam Verma, Mr. Atul N & Mr. Arjun Narang, Advs.
versus
DISCIPLINARY COMMITTEE BENCH III
THE INSTITUTE OF CHARTERED ACCOUNTANTS
OF INDIA & ANR. ….. Respondents
Through: Mr. Ramji Srinivasan Sr. Adv. with Ms. Pooja M. Saigal, Mr. Nikhil Sabri, Mr. Nipun Gupta & Ms. Namrata, Advs. (M: 9810137113)
WITH
+ W.P.(C) 13377/2021 & CM APPL. 42145/2021, 12014/2024
RAHUL CHATTOPADHYAY ….. Petitioner
Through: Mr. Sudhir Makkar, Mr. Saurabh Kripal, Sr. Advs. with Mr. Allwyn Noronha, Mr. Kamal Shankar, Mr. Gautam Verma, Mr. Atul N & Mr. Arjun Narang, Advs.
versus
DISCIPLINARY COMMITTEE BENCH III
THE INSTITUTE OF CHARTERED ACCOUNTANTS
OF INDIA & ANR. ….. Respondents
Through: Mr. Ramji Srinivasan Sr. Adv. with Ms. Pooja M. Saigal, Mr. Nikhil Sabri, Mr. Nipun Gupta & Ms. Namrata, Advs. (M: 9810137113)
WITH
+ W.P.(C) 13378/2021 & CM APPL. 42147/2021, 12018/2024
AMITESH DUTTA ….. Petitioner
Through: Mr. Sudhir Makkar, Mr. Saurabh Kripal, Sr. Advs. with Mr. Allwyn Noronha, Mr. Kamal Shankar, Mr. Gautam Verma, Mr. Atul N & Mr. Arjun Narang, Advs.
versus
DISCIPLINARY COMMITTEE BENCH III
THE INSTITUTE OF CHARTERED ACCOUNTANTS
OF INDIA & ANR. ….. Respondents
Through: Mr. Ramji Srinivasan Sr. Adv. with Ms. Pooja M. Saigal, Mr. Nikhil Sabri, Mr. Nipun Gupta & Ms. Namrata, Advs. (M: 9810137113)
WITH
+ W.P.(C) 13379/2021 & CM APPL. 42149/2021, 12015/2024
RAJAN WADHAWAN ….. Petitioner
Through: Mr. Sudhir Makkar, Mr. Saurabh Kripal, Sr. Advs. with Mr. Allwyn Noronha, Mr. Kamal Shankar, Mr. Gautam Verma, Mr. Atul N & Mr. Arjun Narang, Advs.
versus
DISCIPLINARY COMMITTEE BENCH III
THE INSTITUTE OF CHARTERED ACCOUNTANTS
OF INDIA & ANR. ….. Respondent
Through: Mr. Ramji Srinivasan Sr. Adv. with Ms. Pooja M. Saigal, Mr. Nikhil Sabri, Mr. Nipun Gupta & Ms. Namrata, Advs. (M: 9810137113)
WITH
+ W.P.(C) 13380/2021 & CM APPL. 42151/2021, 12013/2024
PRIYANSHU DINESHKUMAR GUNDANA ….. Petitioner
Through: Mr. Sudhir Makkar, Mr. Saurabh Kripal, Sr. Advs. with Mr. Allwyn Noronha, Mr. Kamal Shankar, Mr. Gautam Verma, Mr. Atul N & Mr. Arjun Narang, Advs.
versus
DISCIPLINARY COMMITTEE BENCH III
THE INSTITUTE OF CHARTERED ACCOUNTANTS
OF INDIA & ANR. ….. Respondents
Through: Mr. Ramji Srinivasan Sr. Adv. with Ms. Pooja M. Saigal, Mr. Nikhil Sabri, Mr. Nipun Gupta & Ms. Namrata, Advs. (M: 9810137113)
WITH
+ W.P.(C) 13381/2021 & CM APPL. 42153/2021, 12019/2024
USHA RAJEEV ….. Petitioner
Through: Mr. Sudhir Makkar, Mr. Saurabh Kripal, Sr. Advs. with Mr. Allwyn Noronha, Mr. Kamal Shankar, Mr. Gautam Verma, Mr. Atul N & Mr. Arjun Narang, Advs.
versus
DISCIPLINARY COMMITTEE BENCH III
THE INSTITUTE OF CHARTERED ACCOUNTANTS
OF INDIA & ANR. ….. Respondents
Through: Mr. Ramji Srinivasan Sr. Adv. with Ms. Pooja M. Saigal, Mr. Nikhil Sabri, Mr. Nipun Gupta & Ms. Namrata, Advs. (M: 9810137113)
AND
+ W.P.(C) 13382/2021 & CM APPL. 42155/2021, 12016/2024
ANURAG KHANDELWAL ….. Petitioner
Through: Mr. Sudhir Makkar, Mr. Saurabh Kripal, Sr. Advs. with Mr. Allwyn Noronha, Mr. Kamal Shankar, Mr. Gautam Verma, Mr. Atul N & Mr. Arjun Narang, Advs.
versus
DISCIPLINARY COMMITTEE BENCH III
THE INSTITUT OF CHARTERED ACCOUNTANTS
OF INDIA & ANR. ….. Respondents
Through: Mr. Ramji Srinivasan Sr. Adv. with Ms. Pooja M. Saigal, Mr. Nikhil Sabri, Mr. Nipun Gupta & Ms. Namrata, Advs. (M: 9810137113)
CORAM:
JUSTICE PRATHIBA M. SINGH
JUDGMENT
Prathiba M. Singh, J.
1. This hearing has been held through hybrid mode.
A. Background:
2. The present judgement deals with 10 writ petitions filed by various Petitioners against the Institute of Chartered Accountants of India (hereinafter ICAI) in furtherance to disciplinary proceedings conducted by ICAI. The 10 writ petitions are disposed of by a common judgement. The broad issue discussed in the present writ petitions are with regard to professional misconduct and code of ethics of Chartered Accountants (hereinafter CAs), emphasizing on the responsibility of CAs as also the Chartered Accountancy firms (hereinafter firms) to maintain integrity. The profession of CAs plays a pivotal roles in financial reporting, auditing, and advisory services. Thus, any misconduct on their part/ the firms part can lead to serious consequences, legal ramifications and losses to clients, apart from larger implications for society as a whole. The ICAI is the regulatory body governing CAs, which defines and addresses professional misconduct through its Code of Ethics and its disciplinary mechanisms. In this judgement, the powers and procedure followed by ICAI is looked into. Considering that there are many writ petitions, the contents of the judgement are divided in the following sections:
Table Of Contents
A. Background: 5
I. W.P.(C) 6532/2022 TITLED RAKESH DEWAN V. DISCIPLINARY COMMITTEE THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA & ANR. 8
II. W.P.(C) 11944/2021 TITLED HARINDERJIT SINGH V. DISCIPLINARY COMMITTEE BENCH-III, THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA & ANR. 8
III. W.P.(C) 13375/2021 TITLED ABHISHEK RARA V. DISCIPLINARY COMMITTEE BENCH-III, THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA & ANR. 13
IV. W.P.(C) 13376/2021 TITLED USHA RAJEEV V. DISCIPLINARY COMMITTEE BENCH-III, THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA & ANR. 14
V. W.P.(C) 13377/2021 TITLED RAHUL CHATTOPADHYAY V. DISCIPLINARY COMMITTEE BENCH-III, THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA & ANR. 17
VI. W.P.(C) 13378/2021 TITLED AMITESH DUTTA V. DISCIPLINARY COMMITTEE BENCH-III, THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA & ANR. 18
VII. W.P.(C) 13379/2021 TITLED RAJAN WADHAWAN V. DISCIPLINARY COMMITTEE BENCH-III, THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA & ANR. 20
VIII. W.P.(C) 13380/2021 TITLED PRIYANSHU DINESHKUMAR SHARMA V. DISCIPLINARY COMMITTEE BENCH-III, THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA & ANR. 21
IX. W.P.(C) 13381/2021 TITLED USHA RAJEEV V. DISCIPLINARY COMMITTEE BENCH-III, THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA & ANR. 22
X. W.P.(C) 13382/2021 TITLED ANURAG KHANDELWAL V. DISCIPLINARY COMMITTEE BENCH-III, THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA & ANR. 24
B. Submissions 25
C. Summary Of The Writ Petitions & Stand Of The Petitioners 29
D. Report Of Disciplinary Committee Bench Iii, Dated 2nd July 2018 32
E. Scheme Of The Chartered Accountants Act, 1949 47
F. Judgments 51
G. Findings 59
H. Conclusion & Directions: 70
3. Can the Institute of Chartered Accountants of India (ICAI) take action against Chartered Accountant firms for professional misconduct under the existing provisions of the Chartered Accountants Act, 1949 (hereinafter, the Act) or is the ICAI empowered to only take action against one person, who is identified by the firm? – This question arises in these petitions. The question has wider implications and ramifications as, if the submission of the individual Chartered Accountants (hereinafter, the CAs) who are Petitioners is accepted, the ICAI would in effect only have the power to take action against the persons identified as members answerable by the firm itself, and not against the firm as a whole.
4. A total of 10 writ petitions were filed by the partners of the following firms:
* M/s BSR and Associates LLP – Rakesh Dewan
* M/s Price Waterhouse & Co. Chartered Accounts LLP- Harinderjit Singh and Abhishek Rara
* M/s Dalal and Shah LLP – Usha Rajeev and Priyanshu Dineshkumar Gundana
* M/s Price Waterhouse & Co. Chennai, LLP – Rahul Chattopadhyay
* M/s Price Waterhouse & Co. LLP – Rajan Wadhawan
* M/s Price Waterhouse & Co. Bangalore, LLP – Amitesh Dutta
* M/s Price Waterhouse, Kolkata – Usha Rajeev
* M/s Lovelock & Lewes, Kolkata – Anurag Khandelwal
The facts of each of the total 10 writ petitions are summarised below. The case proceedings in the writ petitions are similar and the above-mentioned CAs (the Petitioners) have sought to be released from disciplinary proceedings being conducted by ICAI as they are not the nominated `members concerned in the proceedings for misconduct as per Rule 8 of The Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules 2007 (hereinafter, the Rules). Since the identified persons are referred to as disclosed member in the petitions, member answerable in the ICAI proceedings and member/ members concerned in the Rules, the identified persons by various firms hereinafter shall be referred to as member answerable. This judgement considers the Act and the Rules in order to address the issues that arise when allegations of misconduct are raised against Chartered Accountants and Chartered Accountancy firms. The writ petitions raise common questions and hearings have been conducted from time to time.
Brief facts of the Writ Petitions filed:
i. W.P.(C) 6532/2022 titled Rakesh Dewan v. Disciplinary Committee, The Institute of Chartered Accountants of India & Anr.
5. In this petition, on behalf of the Petitioner, substantial arguments were heard on 21st March, 2023 and on 5th April, 2023. However, an application was moved for withdrawal of the said petition. Vide order dated 21st July, 2023, the writ petition was dismissed as withdrawn in the following terms:
2. Mr. Sudhir Makkar, ld. Senior Counsel appearing for the Petitioner, upon instructions from Ms. Anindita Roychowdhury, ld. Counsel submits that the Petitioner wishes to withdraw the present writ petition as the Disciplinary Committee of ICAI has already progressed further in its proceedings against the Petitioner.
3. Accordingly, the present petition is dismissed as withdrawn with liberty to the Petitioner avail of his remedies in accordance with law. All the pending applications are also disposed of.
4. All the contentions of the parties are left open.
5. The Disciplinary Committee may take its decision uninfluenced by any observations made by this Court.
ii. W.P.(C) 11944/2021 titled Harinderjit Singh v. Disciplinary Committee Bench-III, The Institute of Chartered Accountants of India & Anr.
6. This Petitioner is a partner at M/s Price Waterhouse and Co. Chartered Accountants LLP (PWC CA LLP) and is stated to be a Chartered Accountant practicing for more than 32 years when the writ petition was filed in 2021. He is a senior partner in PWC CA LLP. The Petitioners case is that his firm is also a member of the ICAI since 1998. The firm received a notice at its Kolkata office on 16th March, 2018, which was issued in continuation of written communication in 2016. The said communication relied upon the report of Operation of Multi-National Accounting Firms in India. According to the said notice, the Petitioners firm which is part of a global network of connected entities was found to be using the same email address, domain name, logos, etc. as displayed on the visiting card.
7. According to the ICAI, disclosure of an affiliation with an international entity is contrary to its recommendations of January, 1995. Various documents of the firm were relied upon to allege that the members of the firm had access to common resources, methodology, knowledge and expertise. The stand of the ICAI in its communication was that the conduct of the firm was in violation of Items (2), (5) and (7) of Part I of the First Schedule to the Act and Item (1) of Part II of the Second Schedule to the Act.
8. In addition, in the said notice, the ICAI placed reliance on the orders passed by the Supreme Court in S. Sukumar v. The Secretary, Institute of Chartered Accounts of India & Ors. [(2018) 14 SCC 360] in Civil Appeal No. 2422 of 2018 dated 23rd February, 2018. In the said judgment, the Supreme Court had made observations relating to the PWC group, which consisted of all the above firms. Each of the firms had multiple partners.
9. According to the Supreme Courts decision in Sukumar (supra), violations under Sections 25 and 29 of the Act were flagged including the manner of sharing of fee by Indian Chartered Accountant firms, which are associated with international group entities. In view thereof, the Supreme Court concluded that the PWC group of firms have violated the provisions of the Act.
10. Vide the said notice dated 16th March, 2018 the ICAI called upon the firm to disclose the names of the members, who are answerable in respect of the allegations. In response to the said notice, the Petitioner sent a letter dated 6th April, 2018 seeking 30 days extension to submit the requisite details. Again on 17th April, 2018, a detailed reply was given to the notice and the firm took the position that there is no member, who is answerable. However, the firm nominated a CA- Mr. Neeraj Kumar Gupta as a person who will provide any clarification on behalf of the firm. Reliance is placed on the relevant portion of the response and the same is extracted below:
In view of the foregoing, since we firmly deny any violation by the Firm of the provisions of the Act, Rules and/or Regulations as alleged in the Notice, there is no member who is answerable for the same. However, without prejudice to these contentions, in response to your requirement and for administrative purposes of communications, we are currently nominating Mr. Neeraj Kumar Gupta, membership number 055158 as the person who shall be answering and providing any clarification for these allegations for and on behalf of Firm and who will respond further should he/she wish to. His declaration in this regard is attached herewith. We may nominate such other person as the firm may deem fit from time to time, as the person who shall provide clarification and responses to these allegations.
In light of our aforesaid explanations of our practices and procedures, which are founded in best of intentions, we most respectfully submit that you give due credence to the substance of this response and take it on your records. We remain committed to cooperate with you at all stages and should you deem fit, we would like to explain our position further in person at a date and time chosen by your good offices. We reserve our right to supplement this response with additional facts and documents if and when the occasion arises.
11. A declaration, on 17th April, 2018 was also filed by the nominated member who was answerable to the said notice, i.e., CA- Mr. Neeraj Kumar Gupta, which reads as under:
Re: Your notice dated March 16, 2018 (Reference No. PPR/HPC/DD/14/INF/l018)
Dear Sir,
I, Neeraj Kumar Gupta, membership number 055158 hereby declare that:
(i) M/s Price Waterhouse & Co Chartered Accountants LLP [FRN. No.304026E/E300009] has received your notice dated March 16, 2018 {Reference No. PPR/HPC/DD/14/INF/2018) (“Notice”), on March 19, 2018; and
(ii) I agree for answering any queries and providing any clarification in relation to the matter underlying the Notice on behalf of M/s Price Waterhouse & Co Chartered Accountants LLP.
This is without prejudice to the contentions already advanced by M/s Price Waterhouse & Co Chartered Accountants LLP, which I concur with, that there are no violations, as alleged in the Notice.
12. Thereafter, the letter dated 6th December, 2018 was issued by the ICAI wherein prima facie allegations were made against the Petitioner and a written statement was sought from the Petitioner. In response thereto, the Petitioner on 24th December, 2018 stated that he was not the partner or member concerned or nominated person nor did he furnish any declaration under the Proviso of Rule 8(b) of the Rules. Thus, it was the Petitioners stand that the notice ought to be withdrawn/dropped.
13. On 3rd January, 2019 the ICAI again took a position that there was no basis for making Mr. Neeraj Kumar Gupta as the member answerable and why the Petitioner was answerable. Hence, a written statement was again sought. However, the Petitioner maintained the position that he deserved to be excluded from the proceedings vide letters dated 30th January, 2019 and 29th April, 2019.
14. It is noted that Mr. Neeraj Kumar Gupta on 21st May, 2018 had adopted the written statement filed by the firm on 17th April 2018 as his written statement. However, the ICAI continued to issue notices to the Petitioner and vide letters dated 10th May, 2019, and 26th September, 2019, stating that the matter is under investigation before the Disciplinary Committee (DC) and that the Petitioner ought to make his submission before the said Committee. On 26th September, 2019, a notice thereafter, was given to firm as also Mr. Neeraj Kumar Gupta.
15. Again, on 10th October, 2019, the Petitioner claimed that he deserves to be removed from the proceedings.
16. The DC held its hearing on 14th October, 2019. The ICAI continued to send notices to the Petitioner and to Mr. Gupta. The Petitioner, however, is stated to have not participated in the said proceedings at all. The hearings continued before the DC of the ICAI.
17. The Petitioner then filed a discharge application before the DC. Despite filing of the said discharge application, the DC of the ICAI issued another notice on 29th November, 2019 informing about the subsequent DC proceedings to be held on 12th December, 2019. The proceedings kept continuing in the said matter and the Petitioners name continued to be a part of the Disciplinary proceedings.
18. The present writ petition then came to be filed on 25th October, 2021. The disciplinary proceedings against the Petitioner were stayed vide order dated 26th October, 2021.
19. The matter was taken up along with other writ petitions filed by similarly placed partners of the Price Waterhouse group. Submissions were heard from time to time in this matter and the connected matters. The hearing commenced on 5th April, 2023 in the main writ petition filed by Mr. Rakesh Dewan being W.P.(C) 6532/2022.
20. Status report was called from the ICAI on 4th October, 2023 as to the stage of the proceedings before the DC. On 13th November, 2023, the Court clarified that the proceedings ought to be continued before the DC and the final report must be placed before the Court.
21. Final report was then placed before the Court on 4th March, 2024. The Petitioner thereafter moved an application CM APPL.12020/2024 in January, 2024 seeking to withdraw the present writ petition.
iii. W.P.(C) 13375/2021 titled Abhishek Rara v. Disciplinary Committee Bench-III, The Institute of Chartered Accountants of India & Anr.
22. The Petitioner in the present case is partner with M/s Price Waterhouse Chartered Accountants LLP (firm). The firm received a notice dated 16th March, 2018 similar to the one issued in W.P.(C) 11944/2021. Notice was issued to the firm in the Gurgaon address, in response to which the Petitioner replied on 6th April, 2018 and sought 30 days time for submission of the response. Correspondence in this letter was signed by the Petitioner on behalf of the firm. Thereafter, a detailed response was issued on 17th April, 2018 on similar lines as in W.P.(C) 11944/2021.
23. In this case, CA-Mr. Anupam Dhawan was nominated by the firm, as the person to provide answers and clarification. The language of this letter is almost identical to the letter in W.P.(C) 11944/2021. The said Mr. Dhawan gave a declaration that he is agreeable for answering any questions and providing any clarification. The ICAI, however, continued the proceedings against the Petitioner and finally vide letter dated 6th December, 2018 agreed with the opinion of the Director (Discipline) that the Petitioner is guilty of professional misconduct. The Petitioner also then filed an application seeking discharge. However, on 9th October, 2021, hearing notice was issued directing the Petitioner to appear on 29th October, 2021.
24. This case was also listed along with other connected matters on 26th November, 2021. The interim order, which was passed on the said date, is as under:
13. Till the next date of hearing, there shall be a stay of the disciplinary proceedings initiated against the petitioner.
25. The Petitioner in the petition pleads that the said proceeding has been prejudicial to the Petitioners professional standing and reputation, hindering him from taking up independent professional assignments.
iv. W.P.(C) 13376/2021 titled Usha Rajeev v. Disciplinary Committee Bench-III, The Institute of Chartered Accountants of India & Anr.
26. The Petitioner- Usha Rajeev who is a partner with M/s. Dalal & Shah LLP (firm) through this writ petition has asserted that ICAI has erred in initiating the disciplinary proceeding against her, disregarding her repeated clarifications that she was not the disclosed member/ member answerable, and nor did she furnish any declaration as required by the Rules. This petition also is on similar lines as W.P.(C) 11944/2021.
27. The firm in the present petition received a notice dated 4th April, 2018 similar to the one issued in W.P.(C) 11944/2021. Notice was issued to the firm at their Mumbai address, in response to which the Petitioner replied on 26th April, 2018 and sought 30 days time for submission of the response. Correspondence in this letter was signed by the Petitioner on behalf of the firm. Thereafter, a detailed response was issued on 27th April, 2018 on similar lines as in W.P.(C) 11944/2021. In this case also, CA -Mr. Neeraj Kumar Gupta was nominated by the firm, as the person who will answer and provide clarifications. Vide letter dated 21st May, 2018 said Mr. Gupta gave a declaration that he is agreeable for answering any questions and providing any clarifications.
28. Further in the letter issued by the Petitioner to ICAI, the language of this letter is almost identical to the letter in W.P.(C) 11944/2021. In the said letter it was stated that the continuation of the disciplinary proceeding is violative of law and procedures prescribed under the Act, as ICAI lacked authority/jurisdiction to proceed against her. In the said writ petition it is also contended that the only reason for including the Petitioner in the disciplinary proceeding is her signing letters on behalf of Dalal & Shah LLP, the firm and responding to requests made by disciplinary directorate of the DC. The ICAI, however, continued the proceedings against the Petitioner and finally vide letter dated 6th December, 2018 agreed with the opinion of the Director (Discipline) that the Petitioner is guilty of professional misconduct. Amidst the proceedings, the Petitioner also took premature retirement on 31st May, 2018, from the firm due to the ongoing issues.
29. The Petitioner also filed an application seeking discharge on 12th December, 2018, 30th January, 2019 and 29th April, 2019. On 10th May, 2019, the disciplinary directorate responded to the Petitioners letter dated 29th April, 2019 by stating that the matter is under investigation and the Petitioner must appear before the DC. Further, on 26th September, 2019, hearing notice was issued directing the Petitioner to appear on 14th October, 2019 before the DC for the disciplinary proceedings. The Petitioner again sent a letter seeking discharge on 10th October, 2019 as also on 20th November, 2019. However, the ICAI continued with the proceedings.
30. This case was also listed along with connected matters on 26th November, 2021. The interim order, which was passed on the said date, is as under:
13. Till the next date of hearing, there shall be a stay of disciplinary proceedings initiated against the petitioners. However, it is clarified that the respondents are free to take a decision on the discharge application filed on behalf of the petitioners. It is also clarified that there is no stay in so far as the disciplinary proceedings initiated against the Firm, Price Waterhouse, Chartered Accountants, LLP.
31. It is stated by the Petitioner that the ongoing proceeding is prejudicial to the Petitioners professional standing and reputation, hindering her from taking up independent professional assignments or being appointed as an independent director. The Petitioner, a Chartered Accountant with over 33 years of experience, asserts that the disciplinary proceeding is detrimental and prejudicial, causing hindrance to her professional pursuits and future endeavours.
v. W.P.(C) 13377/2021 titled Rahul Chattopadhyay v. Disciplinary Committee Bench-III, The Institute of Chartered Accountants of India & Anr.
32. The facts in the present writ petition also are on the lines of W.P.(C) 11944/2021 and the other writ petitions as discussed. In the present case the Petitioner- Mr. Rahul Chattopadhyay is also a CA and a partner of Price Waterhouse & Co. (firm) and has contested the disciplinary proceedings against him. On 23rd March, 2018, a notice was issued to the Firm by the DC of ICAI, initiating proceedings and requesting disclosure of the member answerable. Initially, on 11th April, 2018 the firm, through the Petitioner, sought a 30-day extension to respond, citing the complexity of the request. Subsequently, on 17th April, 2018 the firm responded with a detailed reply on the similar lines of reply in W.P.(C) 11944/2021 and the above writs, refuting the allegations and disclosing CA- Mr. Neeraj Kumar Gupta as the designated member to address the accusations. On 15th May, 2018, Mr. Gupta issued an affidavit along with written submissions presenting himself as the member answerable.
33. Despite the absence of the Petitioners name in the firms disclosure and Petitioners failure to furnish the requisite declaration, he was included in the disciplinary proceedings and DC proceedings were initiated against him on 6th December, 2018. The Petitioner in the present case also made repeated attempts to secure discharge from the proceedings, contesting their legitimacy and his involvement. The Petitioner filed letters on 24th December, 2018, 30th January, 2019, and 29th April, 2019, seeking discharge. Despite these efforts, the proceedings of the DC persisted and the notice was issued to the Petitioner. On 26th September, 2019 further notice was issued by ICAI to Mr. Neeraj Gupta as also the Petitioner informing them about the scheduled hearing of the DC on 15th October, 2019. Additional attempts were made on 10th October, 2019, and 20th November, 2019, reiterating the request for discharge. Nevertheless, the proceedings continued unabated. Further correspondence hearing took place on 14th October, 2019 wherein the Petitioner consistently questioned the maintainability of the proceedings against him and reiterated that he was not the member answerable. Despite his objections and applications for discharge, the proceedings persisted. The Petitioner vide emails dated 15th November, 2019, 10th December, 2019 and through discharge application dated 12th December, 2019, sought discharge from the proceedings. However, despite the continued emails, the Petitioner like in other cases was intimated to join proceedings on 21st January, 2021 and 29th October, 2021.
34. The Petitioner, aggrieved by the continued disciplinary actions despite his protests, initiated the present writ petition. This case was also listed along with connected matters on 26th November, 2021 and the interim order of stay of the DC proceedings was also granted to the Petitioner.
vi. W.P.(C) 13378/2021 titled Amitesh Dutta v. Disciplinary Committee Bench-III, The Institute of Chartered Accountants of India & Anr.
35. The Petitioner- CA Amitesh Dutta, a Chartered Accountant with over 24 years of experience, is associated with the ICAI institute and is a Partner at Price Waterhouse & Co. Bangalore LLP (firm). The present writ petition challenges the initiation of disciplinary proceedings against the Petitioner by the DC, alleging non-compliance with the provisions of Rules and the Act.
36. The Disciplinary Directorate of ICAI issued a notice on 16th March, 2018 to the Firm, seeking naming of a member answerable in respect of the allegations. The Firm responded on 17th April, 2018, refuting the allegations, and disclosing a partner, Mr. Neeraj Kumar Gupta, as the member answerable. The Petitioner, signing on behalf of the Firm, did not file the required declaration under Rule 8(1)(b) of the Investigation Rules. The facts of the present case are similar to all the above petitions. On 15th May, 2018, Mr. Neeraj Kumar Gupta issued written submissions on behalf of the firm.
37. Despite the Petitioner not being the member answerable, the DC of ICAI initiated disciplinary proceedings against the Petitioner on 6th December, 2018 alongside Mr. Neeraj Kumar Gupta. The Petitioner repeatedly clarified his position and challenged the maintainability of the disciplinary proceeding through letters, emails, representations, and during hearings on various dates. The Petitioner repeatedly sent request for discharge on 24th December, 2018, 30th January, 2019, 29th April, 2019, 10th October, 2019, 15th November, 2019, 10th December, 2019 and 12th December, 2019. The Petitioner filed a discharge application before the DC, contesting the proceedings legitimacy. However, Respondent No. 1 continued the disciplinary proceeding against the Petitioner, as evidenced by letters dated 3rd January, 2019, 10th May, 2019, 26th September, 2019, 29th November, 2019, 3rd January, 2020, 1st January, 2021, and 9th October, 2021 directing the Petitioners participation in hearings and for submission of documents. Aggrieved by the said letters, the Petitioner has filed the present writ petition asserting that the DC of ICAI lacks jurisdiction to proceed against him, as he was neither disclosed as member answerable by the Firm nor satisfied the conditions under Rule 8(1)(b) of the Rules. This case was also listed along with connected matters on 26th November, 2021 and the interim order of stay of the DC proceedings was also granted to the Petitioner.
vii. W.P.(C) 13379/2021 titled Rajan Wadhawan v. Disciplinary Committee Bench-III, The Institute of Chartered Accountants of India & Anr.
38. The Petitioner- Rajan Wadhawan, associated with the ICAI institute and a Partner at Price Waterhouse & Co. LLP (firm) has filed the present writ petition. The Petitioner also challenges the initiation of disciplinary proceedings DC, alleging non-compliance with the provisions of Rules and the Act.
39. The Disciplinary Directorate of ICAI issued a notice on 16th March, 2018 to the Firm, seeking disclosure of a member answerable to the allegations. The Firm responded on 17th April, 2018, refuting the allegations, and disclosing a partner, CA Dinesh Yashavant Supekar, as the member answerable, who would answer and provide clarifications. The language of the letter is identical to the letter in W.P.(C) 11944/2021. The Petitioner, signing on behalf of the Firm, did not file the required declaration under Rule 8(1)(b) of the Rules.
40. Despite the Petitioner not being the disclosed member, DC of ICAI initiated a disciplinary proceeding against the Petitioner on 6th December, 2018 alongside Mr. Supekar. The Petitioner sought to clarify his position and challenged the maintainability of the disciplinary proceeding through letters, emails, representations, and during hearings on various dates including emails dated 24th December, 2018, 30th January, 2019, 29th April, 2019, 10th October, 2019, 18th November, 2019, 10th December, 2019 and 12th December, 2019 The Petitioner filed a discharge application before the DC, contesting the proceedings legitimacy. However, Respondent No. 1 continued the disciplinary proceedings against the Petitioner, as evidenced by letters dated 3rd January, 2019, 10th May, 2019, 26th September, 2019, 29th November, 2019, 3rd January, 2020, and 1st January, 2021, directing the Petitioners participation in hearings and for submission of documents. Aggrieved by the said letters, the Petitioner has filed the present writ petition asserting that DC of ICAI lacks jurisdiction to proceed against him, as he was neither disclosed as member answerable by the Firm nor satisfied the conditions under Rule 8(1)(b) of the Rules. This case was also listed along with connected matters on 26th November, 2021 and the interim order of stay of the DC proceedings was also granted to the Petitioner.
viii. W.P.(C) 13380/2021 titled Priyanshu Dineshkumar Sharma v. Disciplinary Committee Bench-III, The Institute of Chartered Accountants of India & Anr.
41. The Petitioner- Priyanshu Dinesh Kumar Sharma, a member of the ICAI institute and a Partner at Dalal & Shah (firm) has filed the present writ petition challenging the initiation of a disciplinary proceeding against the Petitioner by DC, alleging non-compliance with the provisions of Rules and the Act.
42. The Disciplinary Directorate of ICAI issued a notice on 5th April, 2018 and 19th April, 2018 to the Firm, seeking disclosure of a member answerable to the allegations. The Firm responded on 17th April, 2018, refuting the allegations, and disclosing a partner, CA Neeraj Kumar Gupta, as the member answerable, who will answer and provide clarifications. The language of the letter was identical to the letter in W.P.(C) 11944/2021. The Petitioner, signing on behalf of the Firm, did not file the required declaration under Rule 8(1)(b) of the Rules.
43. Despite the Petitioner not being the disclosed member, the DC of ICAI initiated a disciplinary proceeding against the Petitioner on 6th December, 2018 alongside Mr. Gupta. The Petitioner sought to clarify his position and challenged the maintainability of the disciplinary proceeding through letters, emails, representations, and during hearings on various dates including emails dated 24th December, 2018, 30th January, 2019, 29th April, 2019, 10th October, 2019, 18th November, 2019, 10th December, 2019 and 12th December, 2019. The Petitioner filed a discharge application before the DC, contesting the proceedings legitimacy. However, Respondent No. 1 continued the disciplinary proceeding against the Petitioner, as evidenced by letters dated 3rd January, 2019, 10th May, 2019, 26th September, 2019, 29th November, 2019, 3rd January, 2020, and 1st January, 2021, directing the Petitioners participation in hearings and for submission of documents. Aggrieved by the said letters, the Petitioner has filed the present writ petition asserting that DC of ICAI lacks jurisdiction to proceed against him, as he was neither disclosed as member answerable by the Firm nor satisfied the conditions under Rule 8(1)(b) of the Rules. This case was also listed along with connected matters on 26th November, 2021 and the interim order of stay of the DC proceedings was also granted to the Petitioner.
ix. W.P.(C) 13381/2021 titled Usha Rajeev v. Disciplinary Committee Bench-III, The Institute of Chartered Accountants of India & Anr.
44. The Petitioner- Usha Rajeev, a member of the ICAI institute and a Partner at Price Waterhouse (firm) has filed the second writ petition, against the Respondents in relation to the notice sent to the respective firm. The present writ petition also challenges the initiation of a disciplinary proceeding against the Petitioner by DC, alleging non-compliance with the provisions of Rules and the Act. The facts and circumstances of the present writ petition is also similar to the facts in the above mentioned writ petitions.
45. The Disciplinary Directorate of ICAI issued a notice on 16th March, 2018 to the Firm, seeking disclosure of a member answerable to the allegations. The Firm responded on 17th April, 2018, refuting the allegations and disclosing a partner, CA Neeraj Kumar Gupta, as the member answerable, who will answer and provide clarifications. The language of the letter is identical to the letter in W.P.(C) 11944/2021. The Petitioner, signing on behalf of the Firm, did not file the required declaration under Rule 8(1)(b) of the Rules.
46. Despite the Petitioner not being the disclosed member, DC of ICAI initiated a disciplinary proceeding against the Petitioner on 6th December, 2018 alongside Mr. Gupta. The Petitioner sought to clarify her position and challenged the maintainability of the disciplinary proceeding through letters, emails, representations, and during hearings on various dates including emails dated 24th December, 2018, 30th January, 2019, 29th April, 2019, 10th October, 2019, 18th November, 2019, 10th December, 2019 and 12th December, 2019. The Petitioner filed a discharge application before the DC, contesting the proceedings legitimacy. However, Respondent No. 1 continued the disciplinary proceeding against the Petitioner, as evidenced by letters dated 3rd January, 2019, 10th May, 2019, 26th September, 2019, 29th November, 2019, 3rd January, 2020, and 1st January, 2021, directing the Petitioners participation in hearings or submission of documents. Aggrieved by the said letters, the Petitioner has filed the present writ petition asserting that DC of ICAI lacks jurisdiction to proceed against her, as she was neither disclosed as member answerable by the Firm nor satisfied the conditions under Rule 8(1)(b) of the Rules. This case was also listed along with connected matters on 26th November, 2021 and the interim order of stay of the DC proceedings was also granted to the Petitioner.
x. W.P.(C) 13382/2021 titled Anurag Khandelwal v. Disciplinary Committee Bench-III, The Institute of Chartered Accountants of India & Anr.
47. The Petitioner- Anurag Khandelwal, associated with ICAI institute and a Partner at Lovelock & Lewes (firm) has filed the present writ petition. The present writ petition challenges the initiation of a disciplinary proceeding against the Petitioner by DC, alleging non-compliance with the provisions of Rules and the Act.
48. The Disciplinary Directorate of ICAI issued a notice on 19th March, 2018 and 17th May, 2018 to the Firm, seeking disclosure of a member answerable to various allegations. The Firm responded on 4th June, 2018, refuting the allegations, and disclosing a partner, CA N.K. Vardarajan, as the member answerable, who will answer and provide clarifications. The language of the letter is identical to the letter in W.P.(C) 11944/2021. The Petitioner, signing on behalf of the Firm, did not file the required declaration under Rule 8(1)(b) of the Rules.
49. Despite the Petitioner not being the disclosed member, DC of ICAI initiated a disciplinary proceeding against the Petitioner on 6th December, 2018 alongside Mr. Vardarajan. The Petitioner repeatedly sought to clarify his position and challenged the maintainability of the disciplinary proceeding through letters, emails, representations, and during hearings on various dates including emails dated 24th December, 2018, 30th January, 2019, 29th April, 2019, 10th October, 2019, 18th November, 2019, 10th December, 2019 and 12th December, 2019. The Petitioner filed a discharge application before the DC, contesting the proceedings legitimacy. However, Respondent No. 1 continued the disciplinary proceeding against the Petitioner, as evidenced by letters dated 3rd January, 2019, 10th May, 2019, 26th September, 2019, 29th November, 2019, 3rd January, 2020, and 1st January, 2021, directing the Petitioners participation in hearings or submission of documents. Aggrieved by the said letters, the Petitioner has filed the present writ petition asserting that DC of ICAI lacks jurisdiction to proceed against him, as he was neither disclosed as member answerable by the Firm nor satisfied the conditions under Rule 8(1)(b) of the Rules. This case was also listed along with connected matters on 26th November, 2021 and the interim order of stay of the DC proceedings was also granted to the Petitioner.
B. Submissions
50. The hearing in the connected matters commenced on 21st March, 2023. Detailed arguments in the matter were presented on 5th April, 2023 by Mr. Sudhir Makkar, ld. Sr. Counsel appearing on behalf of the Petitioner, who submitted that as per Rule 8 (1)(b) and Rule (8)(2) of the Rules, once a member answerable has been nominated by the firm and that person has agreed and the person files a declaration to that effect then that person is answerable in respect of the allegations raised in the complaint. Ld. Sr Counsel asserted that the complaint ought to be proceeded only against the said person and not against any other person or firm. Ld. Sr. Counsel relied upon the documents filed in the respective writ petition to buttress the position that Mr. Kaushal Kishore (member answerable in W.P. (C) 6532/20233) had repeatedly filed affidavits and given declarations to the effect that he is the member answerable. Mr. Makkar submitted that, thereafter, the ICAI accepted the position that Mr. Kaushal Kishore in W.P. (C) 6532/20233 was the member answerable as was clear from the fact that in all the proceedings which were continued before the DC of the ICAI, Mr. Kaushal Kishore would appear as a member answerable. Further, ld. Sr. Counsel contended that the only basis on which the prima facie opinion was rendered by the Director Discipline that the Petitioner was the person responsible/ member answerable, was due to the signing of the letter dated 12th April 2018 which was sent as a reply to the notice issued by ICAI. He submitted that the Petitioner of the said writ petition was never a member answerable. He further contended that the only other possibility that Director Discipline would have made the Petitioner responsible was on the basis of signatures on the international agreements entered into by the firm.
51. Further, with respect to the proceedings of the DC, it was submitted by the ld. Sr. counsel, that the proceedings before the Disciplinary Directorate were proceedings in accordance with the Act and Rules. He further submitted that insofar as the Petitioner was concerned, the Petitioner in the main writ petition had filed a discharge application before the Disciplinary Directorate which was not considered and hence the Petitioner was constrained to file a writ petition.
52. With regard to the Act and the Rules, firstly, ld. Sr. Counsel submitted that under the applicable provision i.e., Section 21 of the Act, any allegation of misconduct can raised only be against a member, defined in the Act as an individual. He referred to member as given in Section 2(b) and Section 2(2) of the Act where it is defined that Chartered Accountant who are registered for practice are members of the institute. He then submitted that under Section 21 of the Act, the allegations may be made even against a firm, however, disciplinary proceedings could only be instituted against a member whose name appears in the rolls of the ICAI.
53. The arguments further continued on 22nd March, 2024. Mr. Makkar, ld. Sr. Counsel submitted that DC can only proceed against the member answerable and not against any other person or firm. In order to buttress the argument, that the Petitioners were not taking any advantage of the pendency of the writ petitions or the interim order, Mr. Makkar canvassed that the Bench of the DC itself was changed on two occasions. He stated that in July, 2023 a new Bench was constituted by the ICAI and it was not because of the interim order that there was delay in the proceedings of the DC. Moreover, in terms of the note of submissions, that was handed over in Court, he emphasized that the Act or the Rules do not permit attribution of liability to any member beyond the member answerable. Mr. Makkar highlighted that in the note submitted by the ICAI there was a deliberate omission of reference to the letter dated 17th December, 2019, submitted on behalf of all the Petitioners, which explicitly named the accountable member assuming full responsibility i.e., the member answerable. The letter dated 17th December, 2019 by way of illustration, signed and given by Mr. Neeraj Kumar Gupta, was placed before the Court to argue that this member had taken the full responsibility. It was further submitted that the allegation that some junior member was being affixed responsibility of the conduct of the firm was not accurate because the member answerable in all the cases were stated to have more than 20 years experience.
54. Ld. Sr. Counsel further submitted that for the nomination of the member answerable, since there is no specific firm to file a declaration, the member answerable gives a letter in a manner as it is deemed appropriate. There is no prescribed procedure for the same. It is only if a member answerable is not nominated, that Rule 8(2) proviso under the Rules permits the entire firm to be held responsible. If not, as per the ICAIs own understanding, there is only a member answerable, who is responsible. In order to dispel the impression that CAs are not properly regulated, reliance was placed on various provisions of the Companies Act, 2013, Reserve Bank of India Act, 1934 and Prevention of Money Laundering Act, 2002 and the provisions thereunder. Finally, the Court was also informed that in the decision of S. Sukumar (supra), a Committee of Experts was constituted by the Supreme Court and the report of the said Committee and affidavit of the Ministry of Corporate Affairs was filed before the Supreme Court. However, it was submitted that the issue remains still pending therein.
55. Ms. Sehgal, ld. Counsel for the Respondents countered the submissions on behalf of the Petitioners and submitted in the note provided by the ICAI, which was handed over in Court, that there was a specific reference to the letter dated 17th December, 2019 and that the member answerable who has taken the responsibility, has been highlighted. However, she submitted that the ICAIs stand is that the same would not absolve the Petitioners in all the writ petitions. Further, she pointed out paragraphs to 46 and 47 of the S. Sukumar (supra) judgment, to argue that the ICAI had been directed to complete the enquiry expeditiously, which could not happen due to pendency of these writ petitions. She also pointed out that the notice initially was to the firm and the stand of the firm initially was that no member was answerable, but it was only for administrative convenience that the person was being nominated for providing clarifications. As per Rule 8(2) of the Rules, it was submitted by Ms. Sehgal, that the member answerable also has to be a person to whom the transaction is also related and the relationship of such person with the transaction has to be disclosed. She emphasized that no such disclosure was made in this case. She also relied upon the prima facie opinion in the case of Abhishek Rara dated 2nd July, 2018 in W.P.(C) 13375/2021 to highlight the manner in which the question as to whether who could become member answerable has been held to be subject matter of further investigation. It is further submitted that two years after the prima facie opinion was rendered, the writ petitions were filed and a stay was granted. She further stated that the final report dated 22nd January, 2024 submitted by the ICAI to the Court, took cognizance of the earlier stay order dated 26th November, 2021 and the order dated 30th September, 2023 by which the enquiries were directed to be completed and the report was to be filed.
C. Summary of the Writ Petitions & Stand of the Petitioners
56. On the basis of the written pleadings, the written submissions and oral submission, the stand of the Petitioners is that they are individuals, who are partners in the firms. They are not members answerable as per Rule 8 of the Rules, who have been identified by the firm. As per the Petitioners, the proceedings under the Act and the Rules for misconduct can only be against the person, who are identified as the member answerable/ members concerned and not against the firm or any other member or all other members of the firm.
57. In view of the fact that the member answerable was identified and named in each of the cases, the proviso to Rule 8(2) of the Rules cannot be invoked. Considering that the declaration was filed only by the member answerable and no declaration was filed by any other partner (including the Petitioners in the present writ petitions), the disciplinary proceedings against the Petitioners cannot go forward. The judgment in Hema Gusain v. Institute of Chartered Accountants of India and Others (2023 SCC OnLine Del 7621) was relied upon by the Petitioners in their written submissions. The crux of the case of the Petitioners is that the proceedings, if any, can continue only against the member answerable and no one else.
58. On behalf of the ICAI, a counter affidavit was filed as per which the report on Operation of Multi-National Accounting Firms (MNAFs) was considered by the Council of the ICAI in 2010, and the same was the basis of the actions initiated against Price Waterhouse group of firms. In January, 2013, the Council had taken a decision to take the requisite legal action. The Secretary, ICAI had forwarded the matter for necessary action to the Disciplinary Directorate. A letter dated 27th June, 2016 was the sent seeking clarification, which was responded to by the firms. This led to the prima facie opinion dated 2nd July, 2018 formed by the Director (Discipline). The said prima facie opinion was on the basis of various agreements, which were entered into between different entities within the group. The details of the agreements relied upon in the prima facie opinion, are as under:
Price Waterhouse Chartered Accountants LLP DC -858/2018
S.No
Agreements
Date of Agreement
Signatories to the Agreement
1.
Accession Agreement dated 1st October, 1998 between Price Waterhouse Chartered Accountants LLP and PricewaterhouseCoopers International Ltd
1st Oct 1998
CA R.N. Datta
2.
Name License Agreement dated 1st July, 1998 between Price Waterhouse Chartered Accountants LLP and PwC Business Trust
1st July, 1998
CA R.N. Datta
3.
Name License Agreement dated 1st July, 2011 between Price Waterhouse Chartered Accountants LLP and PwC Business Trust
1st July, 2011
CA Prabal Sarkar
4.
Name License Agreement dated 5th May, 2017 between Price Waterhouse Chartered Accountants LLP and PwC Business Trust
5th May, 2017
CA Charan Sevak Gupta
5.
Firm Services Agreement dated 1st July, 1998 between Price Waterhouse Chartered Accountants LLP and PricewaterhouseCoopers Services BV
1st July 1998
CA R.N. Datta
6.
Firm Services Agreement dated 1 July, 2009 between Price Waterhouse Chartered Accountants LLP and PricewaterhouseCoopers Services BV
1st July 2009
CA Pradip LAw
7.
Firm Services Agreement dated 1st July, 2011 between Price Waterhouse Chartered Accountants LLP and PricewaterhouseCoopers Services BV
1st July 2011
CA Prabal Sarkar
8.
Grant Agreement dated 28th March, 2012 between Price Waterhouse Chartered Accountants LLP and PricewaterhouseCoopers Services BV
28th March, 2012
CA Charan Sevak Gupta
9.
Addendum dated 27th March, 2015 to Grant Agreement dated 28th March, 2012
27th March, 2015
CA Abhishek Rara
59. The above table refers to agreements entered into by Price Waterhouse Chartered Accountants LLP DC in W.P. (C) 13375/2021. Similar agreements were entered into by the various firms within different groups which are a part of the abovementioned writ petitions. The same are considered, however not extracted herein. The said agreements were considered before rendering the prima facie opinion by the DC and accordingly ICAIs stand remains constant.
60. As per ICAI, the member answerable in each matter were named just as an administrative obligation and they were not to take any responsibility. Thus, the Petitioners were also included to be a part of the proceedings. In view thereof, a detailed report of the DC dated 2nd July, 2018 was placed on record. The same has been perused and considered by the Court.
D. Report of Disciplinary Committee Bench III, dated 2nd July 2018
61. In the prima facie opinion, the Director (Discipline) had arrived at the following findings:
* That the members of Price Waterhouse group had access to common resources, methodology, knowledge and expertise including audit methodologies, software and guidance, shared IT platforms, shared branding market materials, and they were also known to be sharing of industry specific knowledge and expertise.
* An international audit methodology to serve domestic and multiple clients were being uniformly adopted by all firms part of the PWC group.
* For the said services, the member firms used to pay 2.5% of the firms revenue.
* That there was no data furnished to justify the amounts remitted by the members of the firm to the MNC entities, which was stated to be only in respect of the above matters, i.e., for access to common resources.
* That there was no proof provided to justify that the said amount was not linked to the volume of business generated.
* That each of the member entities were working as one cohesive unit with the Multinational entity. This according to the Director (Discipline) was in violation of Item 5 Part I of the First Schedule under the Act.
* The domain name used was identical amongst the firms. The same were displayed on the visiting cards of all the partners and other partners.
* That any member of the ICAI is prohibited from declaring of being in affiliation with any international entity.
* The firms were in violation of Items 2, 5, and 7 of Part I of the First Schedule under the Act.
* That members of one firm could be seconded on other members on short and long terms basis and the terms and conditions were fixed based on negotiations.
* That Price Waterhouse group of firms had a network of audit firms, which shared technology, technical expertise, administrative and support services.
* That articled assistants, who were trained by one member of the ICAI were being allowed to be shared amongst the Price Waterhouse network. This was in violation of Item 1 of Part II of the Second Schedule under the Act.
* The Code of conduct does not allow partnership with an LLP or a company. The code of conduct also prohibits the fee sharing with MNAFs.
* That if there is no reciprocity provided to CAs of Indian domicile in respect of similar professions of foreign country, such persons/ entities cannot practice in India by creating network. This is in violation of Section 29 of the Act.
* That remittances are received from Price Waterhouse entities in India on the ground of investment.
* That the Multi-National Accountancy Firm (MNAFs) like Price Waterhouse groups have got Indian partnership firms registered with Indian CAs but the real beneficiaries are foreign entities.
* That the agreements signed between the entities clearly establish that there are clauses, which would show use of branding, sharing of revenues etc.
* That revised guidelines on networks dated 27th September, 2011 require that all constituent members of a network have to comply with ethical standard prescribed by Council, which were not complied with by the firm.
* That the agreements entered into by the entities/ firms show that the same were for gain/ profits and not for better functioning of the affiliates.
* That the use of associate of, in association with etc. is prohibited and, thus, the use of the domain name, logo, monogram, hologram etc., of Price Waterhouse is contrary to the provisions of the Act.
* That resources including sharing of staff and also including articled assistants, who cannot be shared as per the Act and the Rules.
* That there was fund movement between MNAFs and the Indian entities.
* The stand of the firms in a similar enquiry by Securities and Exchange Board of India (SEBI) against Satyam Computer Services, was that the requisite action can only be taken by ICAI.
* The Director (Discipline) prima facie held that full disclosure was not made.
* Thus, there is a prima facie material to show that the firms were guilty of professional misconduct.
62. The, prima facie opinion was rendered in the matter of Price Waterhouse & Co. Chartered Accountants LLP wherein the members answerable were recognised as separate from the writ Petitioners as also those notified as members answerable.
63. While this prima facie opinion being given, the judgment of the Supreme Court in S. Sukumar(supra) was also rendered.
64. The initial stand of the firms in the written statements filed in April, 2018, was that there is no member, who is answerable for the same but one person is identified and named for providing clarifications and answering any questions. Thereafter, another declaration was received on 21st May, 2018 by the ICAI wherein again it was stated that the certain individual member is identified for providing clarifications and responses and the said member has adopted the written statement filed by the firm.
65. According to the ICAI, it exercised powers under the proviso to Rule 8(2) of the Rules and regarded various Petitioners as members answerable. However, an interim order dated 26th November, 2021 was passed by this Court directing stay of the disciplinary proceedings. Subsequently, ICAI filed a status report dated 29th November, 2021 regarding the status of proceedings in each of the writ petitions. Further stand of the ICAI as per the status report dated 29th November, 2021 was as under:
S. No.
Ref. No.
Details of Respondent Firms
Member Answerable (Respondent 1)
Other Respondent/Petitioner (Respondent 2)
Status of matter
1
[PPR/HP
C/DD/11/
INF/18-
DC/857/2
018]
M/s Price Water House, Kolkata
(FRN 301112E) in
Re:
CA. Neeraj
Kumar
Gupta (M.
No.
055158)
CA. Usha Rajeev
(M. No. 087191)
On account of Stay in Proceedings against Respondent 2, the matter has been proceeded against the Respondent No. 1 . During this year the
matter was heard on 26th July, 2023, 13th Sept., 2023, 16th Oct., 2023, 3rd Nov., 2023 as well as 20th Nov. , 2023. The matter is listed on 6th Dec, 2023 for hearing final submissions of the Respondent No. l in the matter.
2
[PPR/HP
C/DD/12/
INF/18-
DC/858/2
018]
M/s Price
Waterhouse
Chartered
Accountants LLP
(FRN
012754N/N500016)
formerly known as
M/s. Price
Waterhouse
(FRN012754N)
CA. Anupam
Dhawan
(M.No.0844
51)
CA. Abhishek
Rara (M.No.077779)
On account of Stay in Proceedings against Respondent 2, the matter has been proceeded
against the Respondent No. 1 . During this year the
matter was heard on 26th July, 2023, 13th Sept., 2023, 16th Oct., 2023, 3rd Nov., 2023 as well as 20th Nov., 2023. The matter is listed on 6th Dec, 2023 for hearing final submissions of the Respondent No.1 in the matter.
3
[PPR/HP
C/DD/13/
INF/18-
DC/859/1
8]
M/s Price
Waterhouse & Co.,
Chennai (FRN
050032S)
CA. Neeraj
Kumar
Gupta (M.
No.
055158)
CA. Rahul
Chattopadhyay
(M. No. 096367)]
On account of Stay in Proceedings against Respondent 2, the matter has been proceeded
against the Respondent No. 1 . During this year the
matter was heard on 26th July 2023, 13th Sept., 2023, 16th Oct., 2023, 3rd Nov., 2023 as well as 20th Nov., 2023. The matter is listed on 6th Dec, 2023 for hearing final submissions of the Respondent No.1 in the matter.
4
[PPR/HP
C/DD/14/
INF/18-
DC/860/2
018]
M/s. Price
Waterhouse & Co.,
Chartered
Accountants LLP
(FRN304026E/E300
009) [Formerly
known as M/s Price
Waterhouse & Co.
(FRN304026E)]
CA. Neeraj
Kumar
Gupta (M.
No.
055158)
CA. Harinderjit
Singh (M. No,
086994)
On account of Stay in Proceedings against Respondent 2, the matter has been proceeded
against the Respondent No. 1 . During this year the
matter was heard on 26th July, 2023, 13th Sept., 2023, 16th Oct., 2023, 3rd Nov., 2023 as well as 20th Nov. , 2023. The matter is listed on 6th Dec, 2023 for hearing final submissions of the Respondent No.1 in the matter.
5
[PPR/HP
C/DD/15/
INF/18-
DC/861/2
018]
M/s Price
Waterhouse & Co.
LLP, New Delhi
(FRN 016844N/
N500015) (formerly
known as M/s Price
Waterhouse & Co.,
New Delhi (FRN
016844N))
CA. Dinesh
Yashavant
Supekar (M.
No. 100572)
CA. Rajan
Wadhawan
(M.No.90172),
Gurgaon
On account of Stay in Proceedings against Respondent 2, the matter has been proceeded against the Respondent No. 1 . During this year the
matter was heard on 26th July, 2023, 13th Sept., 2023, 16th Oct., 2023, 3rd Nov., 2023 as well as 20th Nov. , 2023. The matter is listed on 6th Dec, 2023 for hearing final submissions of the Respondent No.1 in the matter.
6
[PPR/HP
C/DD/16/
INF/18-
DC/862/2
018]
M/s Price Water
House, Bangalore
LLP (FRN
007567S/S200012)
(formerly known as
M/s Price Water
House, Bangalore
(FRN 007567S)
CA. Neeraj
Kumar
Gupta (M.
No.
055158)
CA. Amitesh
Dutta (M. No.
058507
On account of Stay in Proceedings against Respondent 2, the matter has been proceeded
against the Respondent No. 1 . During this year the
matter was heard on 26th July, 2023, 13th Sept., 2023, 16th Oct., 2023, 3rd Nov., 2023 as well as 20th Nov. , 2023. The matter is listed on 6th Dec, 2023 for hearing final submissions of the Respondent No.l in the matter.
7
[PPR/HP
C/DD/18/
INF/18-
DC7864/2
018]
M/s Lovelock &
Lewes, Kolkata
(FRN 301056E) in
Re:
CA. N K
Varadarajan
(M. No.
090196)
CA. Anurag
Khandelwal (M.
No. 078571
On account of Stay in Proceedings against Respondent 2, the matter has been proceeded against the Respondent No. 1 . During this year the
matter was heard on 26th July, 2023, 13th Sept., 2023, 16th Oct., 2023, 3rd Nov., 2023 as well as 20th Nov. , 2023. The matter is listed on 6th Dec, 2023 for hearing final submissions of the Respondent No.1 in the matter.
8
[PPR/HP
C/DD/75/
INF/18-
DC/865/2
018]
M/s Dalal & Shah
Chartered
Accountants LLP
(FRN
102020W/W100040
) (Formerly known
as M/s Dalal & Shah
(FRN 102020W) in
Re:
CA. Neeraj
Kumar
Gupta (M.
No.
055158)
CA. Priyanshu
Dineshkumar
Gundana (M. No. 109553)
On account of Stay in Proceedings against Respondent 2, the matter has been proceeded against the Respondent No. 1 . During this year the
matter was heard on 26th July, 2023, 13th Sept., 2023, 16th Oct., 2023, 3rd Nov., 2023 as well as 20th Nov. , 2023. The matter is listed on 6th Dec, 2023 for hearing final submissions of the Respondent No.l in the matter.
9
[PPR/HP
C/DD/75/
INF/18-
DC/866/2
018]
M/s Dalal & Shah Chartered
Accountants LLP (FRN
102021W/W100110
) (Formerly known as M/s Dalal & Shah (FRN 02021W) in
Re:
CA. Neeraj
Kumar
Gupta (M.
No.
055158)
CA. Usha Rajeev (M. No. 087191)
On account of Stay in Proceedings against Respondent 2, the matter has been proceeded against the Respondent No. 1 . During this year the
matter was heard on 26th July, 2023, 13th Sept., 2023, 16th Oct., 2023, 3rd Nov., 2023 as well as 20th Nov. , 2023. The matter is listed on 6th Dec, 2023 for hearing final submissions of the Respondent No.l in the matter.
66. Thereafter, however, pursuant to the order dated 30th November, 2023 passed by this Court, ICAI concluded its proceedings and the final findings dated 22nd January, 2024 were placed before the Court.
Summary Report of the Disciplinary Committee Bench III (2023-2024) dated 22nd January, 2024
67. Various allegations, which were gone into in the final report were as under:
a. First